Advisors

Financial advisors say the damndest things, like realtors. They tell you to keep an emergency fund equal to six months’ spending, for example. Wrong. Get a line of credit. It costs you nothing to set up and every dollar you own can then be working. Besides, when was the last time you had an emergency?

Advisors tell you the first money to save for when you’re wrinkly and your bladder retires, is in an RRSP. Wrong. We covered this ground yesterday – the first thing you top up, and keep full, is that TFSA.

RRSPs are actually a bad retirement idea for anyone under the age of 55. There’s little doubt personal tax rates will be higher in a decade, for starters. You could be paying more in tax when you don’t have a job and cash it in than you saved when working and contributing. Worse, if you earn capital gains and dividends inside an RSP – which are both taxed at the lowest level – that advantage is largely lost when retirement hits and you must take the money as income, and pay more.

Remember, RRSPs are for tax-shifting, not retirement saving. For example, put money in there with a frenzy if you happen to work for a big Canadian newspaper or magazine, because you can pull it out when you’re unemployed. Open a spousal plan if your babe is at home with babies. You can contribute up to your own limit, write it off your taxable income, then collapse the plan and use it for her yoga classes after three years. That’s called income splitting.

Or open a spousal plan and whack your cash in a few years before you start a family. It can all be taken out, often with no tax, to finance a mat leave. Do the same with a sabbatical in future years, or a trip back to school, or when you throw away your career as a surgeon to become an animal rescue activist. These are the everyday things that an RRSP’s good for. Retirement? Not so much.

Advisors tell you that real estate forms the cornerstone of personal financial planning. Wrong. They say paying off mortgage debt is the holy grail. Wrong again. We dealt with the mortgage question some days ago, showing it makes no sense to pay off a below-prime borrowing which is actually lower than the inflation rate. Why repair the bank’s mistake? And when you can earn 7% or better with a nice, white-bread bland balanced portfolio, why shovel more equity into your house?

This goes to the part of the Canadian Securities Course (boot camp for advisors) about a house. Tell your clients to buy one, it says. The logic is that real assets will keep pace with inflation and turn real estate into a storehouse of value. Like pet rocks or Kias. Of course it didn’t work in America, Britain, France, Spain or Kelowna. The world’s now experiencing asset deflation at the same time as price inflation, which means families see house equity falling while monthly living costs rise. Soon (October) they can add higher interest charges to the mix.

Real estate, especially the kind bought with 5% or 10% down, turns into a wealth trap unless values endlessly rise – and such a thing’s impossible, even in Vancouver. In fact, this week the latest Demograhia report reminded us that real estate in the Mouldy City is “severely unaffordable” and Van is the second most-awful place on the planet in which to own a house, even after the latest market plop. It’s why so many people there are hooped, with empty TFSAs, withered little investment accounts, bloated mortgages and strange people living in the basement.

Of course, all of Canada is turning into an oddity. While all 20 major US markets are considered affordable, Toronto and Calgary are sliding. Nine years ago this country was among the six most desirable in which to buy property, but has now suffered the greatest deterioration.

“Canada’s deteriorating housing affordability was led by large house price increases relative to incomes in Toronto (50%), Montreal (65%) and Vancouver (80%) since 2004. As housing affordability has deteriorated (globally), there has been a tendency on the part of housing industry and financial market analysts to ‘cheer on’ abnormally high house price increases as if housing were a commodity, like gold. Housing is much different. It is a basic necessity and adequate, comfortable housing is necessary for a decent standard of living.”

Exactly. You’d think most advisors would know that. After all, you buy what appreciates and rent what depreciates. That’s why smart people lease cars from dealerships dumb enough to offer 0.9% financing, even when the vehicle costs more. It’s why house and condo renters in Toronto, Edmonton or Burnaby enjoy being subsidized every month by the schleps who own them. It’s why you should worship liquidity in a turgid world.

188 comments ↓

I could use one, I’m confused now…Need one that can help me short America.

Why I’m shorting America you ask? I’m going to tell you….

People fascinate me, being who I am I always try and find out what makes them tic.

In the USA some People are mad as hell, they got guns, and apart from a few pink shirt wearing New Yorkers, the white man in parts that see little snow, are starting to know what it feels like to be a brother 100 years ago.

Globalization has moved jobs to 3rd world countries, not all boys do well in school, not that school makes you any smarter, but an obedience certificate can get you a cube with ½ the buying power a sweeper 25 years ago got. But the options for a decent wage and a white picket fence for the un schooled good old boy is slipping fast. Most join the army.

I got detained at AC airport cause my casino hosts admin spelt my name wrong, how Ironic, no one from the airline had the authority to key in the right name, central air port command had to be called in to do it at head office. They still screwed it up, plane was going to leave with out me, I walked over and informed TSA my luggage was on the plane, they called someone and would not let to leave till it was removed.

Knowing I had a problem I took my name tags off my bag before I placed it on the belt my instinct always ahead of the curve, at which point, central command final got my 3 letter first name right.

I got on, an hour and ½ after the plane was due to depart. 3 hours to change an N to an M Needless to say I was not popular when I was let on the plane. I was laughing inside.

But the USA is descended into a police state fast, senior managers are not trusted to make basic logical day to day decisions, swap an N for an M, the machine knows that its slaves are not happy bunny rabbits. Machine don’t trust anyone, anywhere, from generals to the homeless. They fear the good old white boys with guns way more than any brown guy in the desert.

I can’t predict what the in-sighting incident will be that turns that place upside down, I just feel it’s coming and coming fast, The markets will be hit hard.

I can sense the slaves frustration of being sold an empty box of chocolates at a premium price where the seller smirks and says, what you going to do about it boy….I own the army, the media, the courts, employers, and your soul………

Now give me your guns boy…

Vlad posts, soft when one share’s a smoke and a chit chat out side the poker room with a few good old boys from the south that were drinking too much….What an eye opener. Both of them X marines…..Who know the constitution word for word………….and they say there are many of them…..

I disagree with you about the line of credit being sufficient in an emergency. In 2010 my hubby was laid off, and we wound up living off our emergency fund and my much smaller pay cheque for almost 4 months. Having that fund sure took a lot of the stress out of the situation. And we definitely wouldn’t have wanted to run up a balance on our line of credit when we didn’t know how long it could be before he found another job,
When he did find another job, we also needed money to pay for our move. So again, our emergency fund helped make that a little more stress free.
As for our being mortgage free, it enabled us to get by on a lot less when we lost my hubby’s income.
Although my hubby got another job, he was unfortunate enough to get laid off again 2 1/2 years later. And again, having an emergency fund as well as being mortgage free, really helped avoid a devastating blow evolving into a complete financial disaster.
Trust me when I say you do not want to be running up your line of credit when you don’t know where your next pay cheque is coming from!
I’m happy to report that my husband is once again fully employed. But experience has taught me that having an emergency fund is essential if you want to have peace of mind.

Funds in a liquid portfolio can always be available. Maybe your problem is the husband. — Garth

Funds in a liquid portfolio can always be available. Maybe your problem is the husband. — Garth

But if your forced to cash in your portfolio at an inopportune moment (when the markets are down) you could lose thousands.

As for my hubby, he’d been fully employed for over 35 years the first time he was laid off, and given his age (59) I think he did very well to get another job within 4 months.
When he was laid off the second time it was because the company closed down, yet at the age of 61 he was still able to find another job within 5 months. I think that’s pretty good in our current economic climate. So don’t be so quick to judge.

You are losing money every day you have a do-nothing savings account. Not to mention your sense of humour. — Garth

#139 all_we_need_is_mortgage on 01.21.13 at 4:15 pm
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Fellow dogs have discussed that topic before, and Garth has blogged on it recently. The real estate boards quietly reduce sales numbers from the previous year to inflate current-day statistics. So, what ends up making headlines in real time can become an outright lie.

Additionally, with lesser sales, average prices are actually pulled up slightly because higher end homes carried more weight in the average. Garth has always cautioned that the calm before the storm is less sales with higher prices.

You have to ask yourself these questions:
Why does the real estate cartel ‘seasonally adjust’ numbers?
Why do they quietly adjust old numbers down?
Why don’t they report median values?
Why did they invent the ‘frankenumber’?
Why do they cherry pick and report on only those data that suggest an inflating market?
Why do their headlines misrepresent what is written in the body of the document?
Why do they hide historical sales data from prospective buyers?

Don’t understand which financial advisers Garth is talking about. Ones that I talk to (with RBC) are yapping non-stop about TFSA. Do they get paid commission for every person they sign up? How much does the govt pay RBC to service these accounts?

A little fog and temperatures well above zero predicted for the next 14 days in soggy Vancouver? Signs of an early Spring coming. Ten days in Montreal over Christmas convinced me: the east is no country for old men, not in winter at least. It is different here.

Toronto issues cold weather alert
Toronto Sun – ‎4 hours ago‎
TORONTO -. The city issued a cold weather alert Monday as a deep freeze settled over the province. With Environment Canada predicting a high of only -11C on Tuesday, the cold alert triggers a series of actions designed to protect those on the streets.

My plan is to try and fill out my TSFA but I do think I will be getting married in a couple of years and want to be able to put in for a Home Buyers Plan through the RRSP.

I recall this use of RRSPs as being Garth approved but for some reason I doesn’t seem right. Is there something I’m missing? And given my relatively short timeframe (5 or so years) to buying a home is there a portfolio that is more suited to a short term horizon?

I’m with Dorothy on this one: when bad things happen I’d sure rather have six months of grace than an immediately rising debt load. Sure, you might not want the emergency fund in something volatile (you worry, as she rightly notes, about yanking it out at the wrong time), but you could put it in something liquid and fairly stable. Or just keep it in a high interest online account, and hope it keeps up with inflation. It’s insurance, and you pay for that insurance by giving up return in exchange for some peace of mind. Not all of us have nerves of steel; for Dorothy, and for me too, the insurance is worth the cost, although that approach won’t suit everyone.

Hi Garth, My RRSP pulled us through a second year at home with our child, as well as a year in a post-university program which advanced my career and pension (more than doubled, including vacation time -yay!). It was a great idea. Thank you!

I keep a six-month cash supply and the same in food and household supplies as insurance. Lines of credit can very quickly become millstones. Debt is absolute; it remains and doesn’t go away. Don’t diss those who plan for emergencies. It doesn’t make us financially incompetent or survivalists.

You could have an accident or a stroke that reduces your earnings to zero and chews up your investments to pay for assisted living. As the saying goes, you are only one breath away from the grave.

Would you believe I’m/we’re paying 131.4/L at the pump right now in Quebec City?
And housing prices close to the same range, with the average salary a lot lower than in Calgary.

But then again, I do love Quebec City. I just have to start walking to work and find a more decent rental.

#11 Dorothy
You sound wise and responsible, but a little old-school fickle. I’m glad that emergency-fund thing worked out for you, but I don’t think Garth’s advice is reckless. Most lines of credit have ridiculously low interest rates, and you don’t have to pay up until you use it. And Garth has always advocated being liquid and having some funds that can be immediately accessed. Now do the math again assuming your emergency fund had been accumulating 7% interest all those years before you ever needed it, and that you could have cashed out any amount you needed at anytime to cover the job loss or the minimal interest charges on the line of credit.
It’s good to be responsible and to practice sound money management, but it’s also very good to think out of the box sometimes.

What of the paid off, cash-flow positive rental properties which are spinning off rental income in large cities?

Just because it’s cash flow positive does not make it a good investment. Rental properties routinely return a less than 3% cap rate. That’s terrible. Even residential REITs aren’t buying anything.

From the last Boardwalk MD&A:

Outlook

The first nine months of 2012 has continued to show strength for the multi-family real estate rental market in Canada. Boardwalk‘s continued strong liquidity has positioned it well for for future acquisitions or value-added opportunities. Recent property transactions continue to demonstrate that there is an increased demand to own apartments in major Canadian markets, to the extent that we continue to witness even further compression of Capitalization Rates, resulting in material increases in the prices of properties in this asset class. Although Boardwalk has not acquired any new apartment units during 2012, we continue to be active in the bidding process; however, Boardwalk has not been able to conclude that acquiring these assets at the offered selling prices would be in the best interest of the Trust on a risk-adjusted basis.

you guys don’t get it. The idea of the line of credit is for short term, immediate need. In time, you liquidate/cash your investments as needed. If your investment has been growing by 7% a year for 10 year, chances are it will still be higher today even if the market is lower when you are forced to withdraw, then it would be if you went with a high interest savings account.
Lets do the math $20,000 invested at 7%^10 years= $39,343
In year 11 when you need the money the market tanks 20% = $31,474.

You’re still higher in year 11, than you would be at 2% per year for 11 years.

I’m with Garth on this. I don’t understand *large* emergency funds when “high interest” savings accounts are paying so little relative to inflation (esp after taxes). I have insurance to cover my medical emergencies not covered by OHIP, my firm pays huge severances at my level for loss of employment (also EI if that fails), insurance for property damage, insurance for automobile accidents, and a huge social safety net of friends and family to fall back on as well for food/shelter/jobs/support.

My investments in ETFs and dividend paying stocks/preferreds are liquid enough that I could sell them within a few weeks or months without a loss in the event of prolonged disurption to income. A few thousand extra in my bank account-which covers the minimum to avoid bank charges— is enough of a cushion for abnormal expenses; and a never used line of credit that charges only 4.25% (unsecured) interest if I ever needed more than that.

If I took 6 or 8 months cash and stuck it in ING earning 1.3% before taxes, what would that benefit me? I can’t come up with any emergency that would cause me to fork out $30k+ in a less than two month time period, my life just doesn’t have that sort of uninsured risk and beyond two months I would be able to tap my diversified investments cherry picking those without unrealized losses (including some high yield bond funds that would be up if stocks were universally down).

Yup, I’ve mentioned recently that the house sale price average is upward biased. That is because high priced houses push it up more than low priced houses weigh it down.

A “favourable” (to the REBs) bias also exists with YoY sales comparisons. A year later, the sales numbers have already been fully adjusted downwards, and are being compared to last months numbers, which have not been adjusted downwards yet. But these are two completely different figures that should never be compared! because more recent numbers will ALWAYS be higher. Even is sales are flat, they appear to be rising YoY.

They should compare to last year’s ORIGINALLY reported numbers, not the adjusted ones.

Garth, during the great recession and financial crisis line of credits ,HELOC’s,were cut off for millions of Americans. A letter saying they have no more access to this life line from the bank, mortgage company. Also, many mortgage companies big and small went bankrupt so you had no access to a line of credit or any credit for that matter. I currently have a cash reserve which is about 2.00% of my total investments earning 1.35% fixed for 1 year. It is about $30,000. You keep pushing line of credits like it’s a no brainer. It is the second time in last few days that you keep saying this. This is like RRSP loans were a great idea but it was just more debt to keep people down drowning in it. Dorothy #6,#11 is right that many emergencies or quick needs for cash can happen. Some examples are an expensive car repair $2,000-$3,000, job loss or short term sickness or disability, new gas furnace $2,500 to $3,500, new roof $5,000 to $6,000 etc. You said that selling liquid assets is a better way to get quick funds but selling in a down market when you least expect it will outstrip any future gains by being wiped out by 10% to 30% easily. Today’s economy is in a unique situation because of the manipulation of short term interest rates. Short term deposits or cashable GIC’s are not normally paying 1.35% but more like 3.50% to 4.50%. I will never depend on a person in any financial institution begging for money that I already have. Any extra return I could make will just be taken by the government (TAX MAN). Garth, remember the feeder of Society.

Hey Garth. Please do not paint all financial advisors with same brush. Some of us have been preaching to diversify out of real estate for years and predicting the same decline in housing values as you have, recommended variable rate mortgages 5 years ago at prime minus .7% and fixed rate mortgages now at less than 4% for 10 years which is opposite what the big banks were/are recommending to the flock. I know, I deal with these people daily. TFSA’s are not for emergency funds or money to paint the house in the spring. The banks sold them to everyone who can breath and stuffed them with low interest savings accounts and GIC’s so the bank could turn around and lend that money back to you at a higher rate. Time to smarten up baby boomers. Canada is full of retirees sitting on their front porch afraid the roof will leak in the next rainstorm because they have no liquid money to fix the roof! Find a good independant advisor who does not work for a bank, listen to sound advice and write your cheque. You should be afraid of politicians who can’t balance their own chequebook and anybody else from Ottawa and you should be more afraid of running out of money in retirement than losing it.
And to Ogopogo, a writer in a newspaper is not an advisor. they are journalists who have to come up with a story each day. If you take your advice from the newspaper, good luck, you are going to need it.

During the financial crisis of 2008 banks rushed to eliminate HELOC’s. They were paying some customers money to close their idle lines of credit on purpose. So I see no harm in what Garth is proposing. There’s no reason to refuse opportunity. Businesses in 2008 were actually rushing to establish lines of credit, sensing that they would soon be shut. Even those that had no interest in borrowing immediately, wanted to keep all lifelines open in case SHTF.

You are always dissing RRSP’s but are you taking into account the money you throw away THIS year in lost opportunity by putting the money in a TFSA instead of an RRSP? For example, the $5,500 that you didn’t throw into your RRSP probably means you gave up about $500 in tax (I don’t know if that’s right, but it seems like it makes a big difference on your taxes when you put into your RRSP). You can invest inside the RRSP the same as you can inside the TFSA. I have a hard time flushing $500 down the toilet now instead of giving to myself even if I will be taxed on it when I’m 70 and need it.

I've known about this for a while from sources way back. Pretty soon, anyone who saves in physical gold and silver will have no problem walking in any major bank and slapping a few dozen coins or bars on the table as a downpayment on a mortgage. I guarantee they will have no problem accepting it.

Emergency funds are usually for an income replacement emergency and can be invested in a balanced income fund inside a TFSA. 6-8% rate of return and no tax. If you don’t need the emergency money… great. How do you pay off a LOC in an emergency if you have no income?

Get into a HELOC or simple interest mortgage as soon as you have 35% in equity. Especially if you have little retirement savings. Pay the interest and save the principle in a proper tactically managed fund with a track record that outperforms the TSX and is not an index fund. You can’t eat the baseboards in retirement but you can likely afford to continue to pay the interest on your HELOC when you have been saving the principle part of the mortgage payment for yourself for several years.

you can use up to $25,000 per person from an RRSP as a first time home buyer. Get an RRSP loan in January say $6000, put it in an RRSP, pay it off monthly ($500) instead of contributing to the RRSP monthly. Take the tax write off from the loan investment in April and put it back in the RRSP… repeat for two to three years = $25,000 Make sure you are in a tactically managed fund, not a fund with the lowest MERs where the manager has no incentive to earn you a decent rate of return.

“Funds in a liquid portfolio can always be available. Maybe your problem is the husband.” — Garth

OMY did I have a good laugh there! Garth that was awesome!

Dorothy and that other safety feature Clevernam3 you do not get it…period and you better wakey up. Here’s the deal, lets say you have 4-6 months in savings totalling about 8 – 10k, when you have that in a stable dividend paying investment vehicle you are getting about $600 to $700 bucks a year on %6 to %7 (10K). Lets say you have a job loss once every 10 years for round numbers. If that is the average you NOW have about $16000 to $17000.

That’s if you did Not roll it over and re-invest it which in reality should be closer to $19000 when you rollover the dividends back into the “rainy day fund”.

When or if the @#$# hits the fan and you get laid under what Garth is saying, is that you would Still use the Line of credit because firstly the cheap rates on a LOC will be less than what you would get on a good dividend portfolio. Hell even if LOC rates moved to %5 its still better!

So in 10 years on the next layoff (too late for you Dorothy as your retired…gigs up), your sitting with about $19000 vs maybe $10500 or so if your going with a so called high interest bank account.

Even the most functionally illiterate financial person can see how obvious this move makes vs having a rainy day savings bank account.

As a gen’xer, all I can do is try to keep that transfer of wealth coming my way from you financially illiterate boomers, especially once inflation really gets going. That’s the price folks, the price you pay from a lifetime of ignoring financial literacy.

In fairness to the Canadian Securities Insitute people, their syllabus was probably written two decades ago and never considered the possibility of a housing bubble on the scale of those we are seeing around the world in the last half dozen years.

Theoretically, if housing prices are only increasing with the rate of inflation (no bubbles which ALWAYS end in crashes) AND if you are holding the house for the very long term (no flipping, no divorcing, no job loss), AND if you are paying off the mortgage (no HELOCs or using the house as an ATM), then (and only then), then a house is usually but not always a good thing to purchase (but it’s still not an “investment” if you’re living in it).

So the CSI is overgeneralising and a literal reading will cost some people a lot of money and bankrupt others, but over multi-decades they are probably technically not wrong…

Garth: I appreciate all the dividend/TFSA info, but should dividends from tax paying companies be put in a non sheltered account for the tax credit while dividends from REITS be put into a sheltered account/TFSA due to the non taxed flow through of profits?

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“Bungle in the Jungle or something like that, or when you’re wrinkly and your bladder retires.” — That’s when one can fertilize the landscaping, by spreading the wealth around a little more!
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#1 Smoking Man — “I’m going to tell you….” — Hi SMan. Links earlier were mostly about countries wanting / taking their gold back. In other words, they don’t trust the US Fed (or anyone else). Currency wars / manipulation? Your guess is as good as mine — Cheers!

Maybe not. There was an alleged “financial advisor” writing in the National Post last weekend who stated he was putting his TFSA funds into a “high interest” bank account paying (wait for it…) 1.2%! (Then in a while he was going to invest in something else, once he figured out what.)

Apparently, there are “advisors”, and then there are “advisors”, to paraphrase James Bond’s chick in Casino Royale. Fortunately, we have the latter…

In the meantime, invest your savings in a balanced portfolio. Yes the stock market goes down sometimes, thank god, that just means your favorite ETF is on sale this week, just like cashews at Costco. And buy a short term Bonds ETF if you’re worried about volatility. God, please stop whining people. This is embarrassing.

These financial advisors, like real estate agents, just repeat what they’re told to say in order to sell. If you’re going to put the research in to finding a good financial advisor, and then crunching the numbers to her strategy (only work with women, they’re statistical proven to less likely to commit fraud, no offence Garth), you might as well do it on your own.

I’m with Dorothy on this one too. 6 months of cash in the bank may not make me a financial wizard but we sleep well at night just knowing it is there and if we or our adult kids have a financial disaster then we have the funds.

I have been in the position before of having most assets invested and then having to sell them for an unexpected bill at a bad time. The I didn’t sleep well.

Off to work, shocking weather right now in England. I even had to go and buy some warm boots in the sales. Palm trees in the garden looking very surprised.

Having a line of credit is nice for extremely quick access. And having 0 debt, cash flow, income streams and assets, I don’t consider a few thousand dollars any more than pocket money, certainly not an emergency fund. Nice thing about credit, when you don’t use it, the financial institutions fall all over themselves to give you a line of credit with the cheapest interest rate. And of course having a balanced, liquid, REBALANCED and DIVERSIFIED portfolio, means you don’t ever have to sell an asset at a loss. No bank is going to cancel a line of credit when you are in this position……ever. Freedom First.

If you don’t know how money works and want to take a red pill here is the link for The Money Masters moviehttp://www.youtube.com/watch?v=HfpO-WBz_mw
This won’t help you at all, you will not feel better, but it is interesting.

You said: “A little fog and temperatures well above zero predicted for the next 14 days in soggy Vancouver? Signs of an early Spring coming.”

Temperatures above zero are normal for Vancouver in the winter. Just because we have temperatures above zero, does not mean we are having an early spring in Vancouver. For much of last week, temperatures were below zero in parts of Metro Vancouver. Trout Lake in East Vancouver had a thin layer of ice over it this past weekend. Iced-over lakes are unusual for Vancouver so this means the weather has been colder than usual, not warmer than usual. They had to put a sign up on Trout Lake warning people to stay off the thin ice. People are not used to ice in Vancouver so some stupid people see a layer of thin ice and think they can go skating. So there are no signs of spring yet in Vancouver. This is definitely winter. But Vancouver did have its first 300 list day on the MLS yesterday so I guess that could be interpreted as a sign of spring.

Among the more interesting bits in a new survey released today is that 71 per cent of homebuyers in British Columbia believe real estate values will rise or hold steady over the next year.
The unicorns told them. — Garth

I think you should clarify the “paying mortgage vs investing in TFSA” thing. There is a threshold at which point one becomes more profitable. It would be awesome if you could set up a small online calculator telling which one is the most profitable depending of the inputs.

#1 Smoking Man on 01.21.13 at 10:25pm
I got detained at the AC Airport cause my casin hosts admin spelt my name wrong.
Knowing I had a problem I took my name tags off my bag before I placed it on the belt my instinct always ahead of the curve, at which point, central command final got my 3 letter first name right.

I got on, an hour and ½ after the plane was due to depart. 3 hours to change an N to an M.

But the USA is descended into a police state fast, senior managers are not trusted to make basic logical day to day decisions, swap an N for an M, the machine knows.

I could use an adviser, what do you charge Garth?

My advice would be to tell us less Smoking Man, with a three letter first name and the last letter is M not N it tells us you are either Jim, Sam, Tim, Tom or Kim! See we do read your lines carefully!

Garth, what you preach is mathematically right – makes no sense to pay off subprime debt and miss on the opportunity to gain, say, 7% annually on the funds that otherwise would go to debt retirement.
However, we are not machines – we are human beings with emotions, feelings, and things we need or want to have. A reserve fund equal to 6 months’ worth of expenses is, for instance, about 18k for my family of 4. 7% per year is 1,260$ per year, or 105$ per month. That is NOT guaranteed money. In certain years, there could be losses. But I would value the mental comfort of having such a cushion at much higher than those 105$ a month. I value my good sleep and reduction of stress at much-much more than that: I hug and kiss my family members much more often when I’m not stressed out.
Same goes for the house: the debt you take does not diminish faster than you pay it off, but your investments fluctuate both in value, as well as in returns. The mental comfort of having a house paid off cannot be mathematically evaluated, and the house is not just any investment, but the most emotional investment a human would make, so there is much more to it that cold numbers.
We are humans, gdamnit, for everything else, there’s Mastercard :)

A caring advisor’s job is to save you from your own emotional swamp. What feels good necessarily isn’t. — Garth

44 Mic – you make a good point about the abnormally low rates, but an alternative for you and others with good
sized portfolios may be to use is as collateral against a
secured LOC of say 5% of the value.

A new furnace is not an emergency. It comes after several years of being told by the furnace repairman (also the guy who wants to install a new one for you for $3,500) that it is on its last legs. You know how long a furnace lasts, so if it is a surprise when it dies, you have bigger problems. Likewise with the roof- it’s not a roll of the dice each year whether the roof spontaneously requires complete replacement. Start thinking about it when the roof is a certain age, and budget for it.

Car maintenance is not an emergency, it is a fact of car ownership.

I liked today’s post because of the line “when’s the last time you had an emergency?” Most financial writers act like emergencies happen all the time, that life is inherently uncontrollable and impossible to predict, so put lots of cash away when by the grace of God you have income, because next week something bad may happen that you are completely ill-equipped to handle. The reality? Most things are fairly predictable results of your lifestyle and the things you own. Job losses happen, but you have the ability to find stop-gap solutions to that when it does happen, and, anyway, weren’t you looking for a job when you found the last one?

I can’t believe it took almost 90 comments to the start the guessing of Smoking Man’s first name!

#79 Buy? Curious? on 01.22.13 at 9:34 am
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Garth is right. I have a line of credit with zero balance but can borrow $40k on it at a moments notice (a simple on-line transfer from it into my bank account). That’s all you need for an emergency fund.

I have been told several times by people that they are heavy (I suspect completely) in cash because they might like to buy a house in whatever time period, and do not want to have to liquidate investments at an inopportune time. Let’s say someone wants to save a larger down payment because they feel like interest rates will be higher in three or four years when they are ready to buy (and prices lower). I know that Garth has covered this, but what are sensible options for investing money for such a short time horizon?

Garth – I supplied you with the source regarding the unaffordability of at least 6 of the 20 major US markets but I dont see my comment, you havent changed your text, and you havent supplied a source for your claim.
What gives?

"Second-time and multi-time buyers represent 70 per cent of those serious about making a move—a trend that emerged in the latter half of 2012 and is expected to continue over the next two-year period. First-time buyers will continue to play a role in the market—at 30 per cent— but this cohort's more experienced counterparts will lead the charge for housing over the next 24 months. "

More amazingly, Susan Pigg somehow spun this survey into a condo-pumping bidding war article.

“Little was heard of housing bubbles in Canada up to about a year ago. Now, predictions of crashes are on the front cover of Maclean’s and other publications. One might wonder if we are talking ourselves into a housing miasma, even though the fundamentals don’t point to one.”

when leasing, you are basically buying a new car every 3 to 4 years, which in the long run,(assuming you need a car always) is very very expensive comparing to buying that same car and drive it for 10, 20 years. But of course, few people have the will power to that.

Well I don’t believe it! What a shock! The first comment by SM and what is far more important is the comment was actually very intelligent! His best yet. I can actually agree with him. Don’t spoil it SM by going back to incoherent blather about irrelevant nonsense.

Dorothy #6 & #11
You have found something that really works for you and keeps you out of debt. Congratulations!

#81 Toronto_CA
Downtown Toronto condos: Signs of life
_________________________________________
That “news” gets replicated with the speed of light.
Google shows it at the top of the list for any search related to RE.
Amazingly well coordinated campaign.

"Mr Gaurav Kumar a mortgage agent who works with Financial Ties Inc. Brampton introduces himself as mortgage broker whereas he is only an agent and is blacklisted in most of the banks and financial institution because of his fraudulent activities and high volume of consumer complaints against him. He still manages to operate his business by forwarding his deals to other corrupt mortgage brokers/agents by keeping his cut."

"We have reported the whole matter to FICO and have formally complained, but everyone tells us we won’t get anything out of this, and that this is the normal practice of people like Gaurav Kumar."

And there you have it. Mortgage fraud is the new normal in Canada, because as long as those mortgages don't get initially approved by brand banks and mortgage financing companies (but purchased and sold afterwards, after all the dirty work is done), then there's nothing to see here.

"Mr Gaurav Kumar a mortgage agent who works with Financial Ties Inc. Brampton introduces himself as mortgage broker whereas he is only an agent and is blacklisted in most of the banks and financial institution because of his fraudulent activities and high volume of consumer complaints against him. He still manages to operate his business by forwarding his deals to other corrupt mortgage brokers/agents by keeping his cut."

"We have reported the whole matter to FICO and have formally complained, but everyone tells us we won’t get anything out of this, and that this is the normal practice of people like Gaurav Kumar."

And there you have it. Mortgage fraud is the new normal in Canada, because as long as those mortgages don't get initially approved by brand banks and mortgage financing companies (but purchased and sold afterwards, after all the dirty work is done), then there's nothing to see here.

# 24 KINGARTHUR: A little fog and temperatures well above zero predicted for the next 14 days in soggy Vancouver? Signs of an early Spring coming.

Ya and a late start to summer. I lived there for ten years, and summer didn’t start until July. You can have it. Besides, snow is fun!
I remember one article in the SUN that told of a man allergic to the sun, so he moved to the Wet Coast because he could go outside more often than not.

Unfortunately most past/future Bridezillas, spoiled by the GTA SFHs they lived in with their parents–who worked for it for decades after starting off living on storetops or comfortable, basic, and adequate homes in humble areas of Toronto–don’t want a home that is just basic and adequate. There is no option other than a McMansion or mini-McMansion.

”Open it now. Use it when needed. Do you need help with you pants, too? — Garth”

#79 Buy? Curious? on 01.22.13 at 9:34 am
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”Garth is right. I have a line of credit with zero balance but can borrow $40k on it at a moments notice (a simple on-line transfer from it into my bank account). That’s all you need for an emergency fund.”

I have lines of credit with 4 different institutions with a zero balance. Also Visa accounts with a zero balance. Probably $100m in available credit. I use them regularly but they are paid off each month. Retired for over 12 yrs. More than enough emergency funds than I need.

A few years back my son needed a bit of cash, about $10,000, as he was a bit short for the amount required to purchase a business. Told him I could use my LOC for that amount and he could just make the payments until able to pay it out. He did within 3 months. He now has a very profitable business earning him in excess of 1/4 million per year with very little overhead. One of the best investments I’ve ever made and didn’t ask for anything other than the loan be repaid.

If you know that your income is going to be seriously reduced at retirement, I would recommend setting these up before you leave the work force. As Garth states, set them up now. As long as you have the assets or investments to back them up, what is the fear? That way, you need not touch your other investments unless absolutely necessary. Gotta love that OPM.

Now I know what the cognitive dissonance is: this is a situation when a person have to exist in two conflicting realities: in the real world where RE condition is deteriorating and in the quite opposite reality created with mass media. Two completely opposite, conflicting pictures. By the way the cognitive dissonance is a serious mental problem, causing: frustration, dread and anxiety.

Wow an additional conspiracy theory! Lets just say the Apple didn’t fall far from the tree! We can just put this one up there with all of the other nut bar conspiracy theories, World Trade Center (Inside Job), Aliens, (Anal Probing), Reptilians running the world, New World Order….Blah, blah, blah
Oh yes and the best of all the unified field theory, hey where did the market go?

So, not long ago Canada’s real estate markets were digesting HAM (Hot Asian Money). With the Bank of Japan preparing to blow its wad in an attempt to achieve 2% inflation in the Land of the Deflating Sun, will Canada soon start attracting the life savings of Mrs. Watanabe?

Maybe this is something the real estate cartel and their media lackeys can latch onto in their desperation to find anything to pump up the markets, even if it’s utterly fanciful.

Our mayor is going to the DAVOS meetings. I am sure the money could be better spent. I have heard a lot of funny stories coming out of those meetings. This post from last year’s meeting was the funniest to me. http://www.thereformedbroker.com/2012/01/25/greetings-from-davos/. Of course I am old enough to be her father and far more serious. Today’s picture made me put conditions on why I like things that purr.
The stock market is looking good for 2013. There has been money moving from cash/bonds to equities (I was wrong it would take longer). This all hearsay – the US Investment Banks are favouring equity investments with the cash from QE and the surplus deposits over loans. From my perspective, they like to front run. It looks like the coast is clear in 2013 while QE is running. I am disappointed gold didn’t fall to $1400 but I haven’t given up hope on that subject. Let us see what the year brings before the bold start to chirp.

#110 Sm_YYC on 01.22.13 at 12:31 pm
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you can search all of ‘greaterfool.ca’ or any other website by going to google and entering the following (website followed by colon followed by search term):

#6 Dorothy on 01.21.13 at 10:34 pm
I agree with you. A line of credit is a debt and in some types of emergencies (i.e., health) the debt can build quickly and will need to be repaid sooner or later.
Kudos to your husband for keeping on, keeping on. (He sounds like a keeper to me.)

To keep an emergency fund or not? I always kept one, but 6 months worth is excessive given the paltry return on savings account. Being bore you to tears conservative, I’ll still keep one but shorten it to 2 months worth. You can get a line of credit cost free you say? Where, at your regular bank?

As for the comment: after all, the goal’s not stuff. It’s freedom. I couldn’t agree more, and have felt that way for most if not all my adult life. I personally don’t know why more people don’t get it, it seems so sensible.

I like this article. Some of the standard wisdom, like pay off your mortgage first, may have been true at some point, but not today. When financial times change, strategies must be reviewed to determine if they need to be changed as well.

I seem to note that some advisors will deviate from the old adages, if it results in more money for them.

For once Smoking Man is right America is done, toast yesterday’s news. America’s motto “it’s not a problem until it’s a problem” is slowing being transformed into “it’s not a problem if we can con the general public into believing every problem is instantly solvable”. America has had it but buying gold and silver isn’t the answer.

Lease a car rather than buy it new? Not bad, but I have a better idea. Why not shop around and buy a good used car, and let someone else pay for the depreciation? On the subject of cars I read recently in The Globe a lot of people are buying trucks these days, and I hear the same thing from Mohammed Bouchama on Auto Shop (CP24 TV). Wow, it must be nice to have that kind of money to spend on a vehicle.

I’ll take a stab at your car lease v purchase question, Garth can correct me if I flub up here.

If a car is leased with very little financing cost as Garth suggests, the depreciation expense and the cost of leasing it are the same over a 4 year period.

Example- you buy a brand new $30k car, you sell it after 4 years for $15k, depreciation cost to you is $15k. If you leased the same car for $315 a month, your cost is $15k.

BUT

If you borrow money to buy a car at 5% interest, you’re out the $15k depreciation on the car AND 5% interest you paid on the loan to buy it, so leasing you came out ahead as leasing just = depreciation expense, no 7% interest cost on the loan.

If you don’t borrow money to buy a car, you could have invested that purchase price capital in a balanced portfolio at 7% and leased the same car for $15k, again leasing wins. Your money was in the market earning money instead of sunk into a depreciating car.

Obviously depreciation slows down after 4 years, beyond 7 or 8 years the car owner is ahead of the car leaser, but many people do trade their cars in after 4 or 5 years. And there’s a cost in driving an old beater to one’s ego that can’t be measured in dollars (joking!)

Sort of make sense? Some people are financing cars at 7 or 8 years now too, which seems ludicrous.

This is why I love this blog! Straight up answers for free. You’re Prometheus, Garth!
Thanks for the advice and letting me post here.
On a side note, have you checked out Smoking Man’s blog? It’s “Out There”. (No disrespect Smokie. You’re like Magic Mushrooms. It’s ok once and while, but not by yourself at Halloween Parties. Whoa!)

I’m not sure I see the value in leasing a car either. I guess it depends on how often you change cars. I bought a 3 year old used Honda Accord with low mileage 3 years ago and I plan to keep it about 10 years, just like my last one. If you take care of it and don’t put on excessive amounts of mileage it is much cheaper. I’ve long since paid it off and maintenance has been extremely low. It still looks almost new.

I guess it all depends what is important to you. Less stuff, more freedom works for me.

I first found myself with a meaningful wad of cash back in October of 1999 – some $10k: my first signup bonus. The S&P500 was about 1350 back then. It is approaching 1500 nowadays: I would have made 8% gain over 13 year period had I put it all in back then. Then again: it would also (and actually did) make me $15000 invested in orange guy’s shorts at the snaring rate of under 4% even at best of times. Neither calculation accounts for inflation or taxes. I came to believe that investing in the stock market implies faith in the financial system which I lack: present highs are completely detached from realities on the ground, or from Baltic Dry index for that matter. More importantly I cherish my piece of mind, serenity and freedom above capital gains. Still renting, hoping between costs for jobs for various Fortune 10s, last couple of years in sunny San Diego (best climate in NA) where $300k can get one an ocean view condo. (I can have a couple of those for cash any day if fancy strikes me. (It wouldn’t). In conclusion, you offer some sound advice at times and are an entertaining read – more of a Schadenfreude type for me, but do remain a one pony show.

The S&P 500 earned 4.5% this month and 13.5% in the last 12 months. Expect more. — Garth

Nothing to explain, Carneys only tool I the shead to talk down the real estate market was talk. The elfin diati helped out a bit, but can you imagine where the re market would be had he told the truth, and rates will stay or go lower down the road…..

He did the right thing, LaughingCon has a chance, be it a small chance of being a land lord one day……

6 months of expenses in cash?! Are you kidding me? That’s like 50 grand. And what “emergencies” are we planning for? Lose your job: current employment insurance will cover things for long enough to find another job. A leaky roof? My roof was replaced 15 years ago and has a 25 year warranty. If in 10 years the warranty runs out and it starts to leak and I can’t pay for repairs, that’s not an emergency, that’s bad planning. Health problems: get disability insurance/critical illness insurance. Death of the household chief bread winner: life insurance.

My point is, you can never hold enough cash to be ready for all eventualities, so don’t try. Think of the actual problems that might come up, and have a plan.

I keep 1 month expenses in a savings account (yielding zero-point crap-all) thinking I might need a little flexibility waiting for insurance cheques etc to come in, and otherwise, I plan for the actual problems referred to as “emergencies”.

Garth, I disagree when you say that renters are being subsidized by owners. Here in Calgary is actually cheaper to own, including property taxes. And yes, there is always that 5% you put down that is not making the 7% you claim a balance portfolio can make, but is not unrealistic to say that the average earner can save that amount of money in a year to invest later on according to the wages in the city. Any comments? Thanks.

“Mr Carney, … suggesting that central bankers could abandon inflation targeting with an alternative mandate for “nominal GDP”, a measure of total growth before adjusting for inflation, if traditional measures fail to produce a recovery.

#141 Doug in London
It’s great owning a 2012 f150 eccoboost and the wife has a 2013 Honda crv! We work our ass to be able to have those vehicles! Paid cash for the truck and lease the crv, could of paid cash for the crv but have other plans for that coin!

#154 Franco on 01.22.13 at 7:17 pm
Garth, I disagree when you say that renters are being subsidized by owners. Here in Calgary is actually cheaper to own, including property taxes. And yes, there is always that 5% you put down that is not making the 7% you claim a balance portfolio can make, but is not unrealistic to say that the average earner can save that amount of money in a year to invest later on according to the wages in the city. Any comments? Thanks.

Show me. — Garth

Franco, allow me to demonstrate. Here is a breakdown of my US portfolio currently held in a Spousal RRSP (and yes, my US holdings are in index ETFs, while my CAD holdings are in Garth-approved allocations):

For a property that is similar to the first 5 or 6 listed there, you can be paying a mortgage of around $1100, plus taxes and condo fees: $1,450. And 5% of a $250k mortgage ($12.5 k) is not, in my opinion (you could rebut this with reliable data), out of reach for an average earner to save in Calgary.

I agree with your blog when applied to the most expensive markets (VAN, GTA, etc.), but I think Calgary is a different scenario.

#154 Franco
Totally disagree. You cannot buy for cheaper than renting in Calgary. In the analysis I’ve done, when you consider the mortgage payment and property tax alone I’ve yet to see the property that would be cheaper on the buy side. And that’s not including maintenance costs or the lost earnings from pulling the down payment out of investments.

Show me the properties you’re referring to that differ. Give purchase price, property taxes, and do the math for an advertised mortgage from a big five banks that would meet CMHC current lending standards (mad 25 year amortization) I’ve done this calculation many times on many properties, never seen it favour buying.

Landlords are absolutely subsidizing renters these days, including in Calgary.

Carney stated during a press conference that they didn’t adopt NGDP in Canada because Canadians wouldn’t understand it (too stupid). The Government and BoC renewed their inflation target agreement last year for a four year term, but they’ll NGDP target anyways by understating CPI.

It’s a psychology game to influence the market. That’s all central banking really is.

If the lease rate is lower than what you can get investing the cash in securities (e.g. Garth’s quoted 0.9% lease rate vs. 5% from preferred shares), it makes little sense to pay cash for the car because you can invest that cash instead. Also, why dump cash into a depreciating asset if you don’t have to?

In terms of tax deductions, leasing is not that much more advantageous, but people do it mostly because you get a new car every three years. However, keep in mind that when you lease a new car, you are paying huge for depreciation. So, constantly leasing new cars is the most expensive way to “own” a car.

The bulk of the cost of driving in the early years comes from just having the car. Strictly speaking from a financial perspective (but not from an ego perspective), the best approach is probably to buy a used car that has already incurred the bulk of its deprecation, (say three or four years old) and drive it into the ground. It helps if you maintain it properly.

I agree although if you really want to drive cheap and park your “image” at the door there are some great deals to be had. Being a “car guy” I always had a special car or occasionally car(s) garaged necessitating the need for a daily driver “beater” car. I’ve put over a 100000 kms on cars that cost me a thousand dollars and were actually quite cheap to maintain. Just do the important stuff. Oil changes, tires,brakes and steering. If any big repair estimate comes up throw the car away and get another. I’ve been amazed sometimes about how you think a car is ready to die and you clock up another 20 or 30000 kms on it. If you need to go on a road trip rent a car–it’s cheap. Old rear wheel drive domestics are the best deal going as they’re so cheap to fix. And, no, they’re not all gas hogs. Eg. mid to late eighties Lincoln Continentals will get approximately 30 mpg highway if in proper tune and driven at legal speeds. You can get a mint condition one of those for about 2500-4500 these days. Average condition probably a thousand or 1500. Same chassis as a Crown Vic. Dependable but cheap to fix.

#140 Tony on 01.22.13 at 4:58 pm
Re: #84 AK on 01.22.13 at 10:04 am
For once Smoking Man is right

What do you mean for once……Seriously you haven’t been here long.

#86 Buy? Curious? on 01.22.13 at 10:34 am
On a side note, have you checked out Smoking Man’s blog? It’s “Out There”. (No disrespect Smokie. You’re like Magic Mushrooms. It’s ok once and while, but not by yourself at Halloween Parties. Whoa!)
…………………………………………………………
LOL it;’s designed that way, do you know how much skill it takes for a sane man, to appear crazy….Lot of work.

#130 TS on 01.22.13 at 3:00 pm
#135 Country Girl on 01.22.13 at 3:33 pm
#136 Doug in London on 01.22.13 at 3:39 pm
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Opening up a bank Line of Credit is FREE. It only costs money when you use it! And yes your regular bank will (should) allow you to open one.

Having a stash of cash sitting around LOSES to inflation, guaranteed. You are losing on that money, month after month. A zero balance on a line of credit costs you ZERO until you begin to use it.

If you have debt, it makes sense to use your cash to pay off your debt (and have a LOC ready in the waiting for emergencies). If you have no debt, but are itching to have 6 months cash sitting around for emergencies, then kudos to you, just know that there is indeed a cost to having that money hanging around.

I agree with Inglorious Investor about leasing and taxes. We tried the beater route out of need many yrs ago when our business was still new and did save money. Our last two cars were good used (3-4 yrs old) low mileage because we could afford it, a back issue necessitated comfort, and with my partner’s increased mileage newer safety features was a priority. We’ve claimed mileage for yrs and has worked for us. We may lease our next one based on what we’ve read in this blog.

Here’s a question Gail V., a Cdn money expert, also suggests leasing then buyout with low cost financing vs cash. I’m curious what you, or others think of this? To me it feels like your just extending/ adding interest costs and payments but maybe it makes sense moneywise for some?

Good explanation. I think we all have comfort zones in life that are hard to replace. as you said peace of mind at a cost, but to some still worth it. Garth suggested getting an LOC before you need it. Learned the hard way it’s easier to get credit when you don’t need it. Skewed, but usually true.

I’m sure you can find examples where the opposite to what I say is true, but then I would ask: why not look further and live in a property where you are better off buying than renting? I find that the NW is way overprized compared to the SE (McKenzie and South of it). If you can’t live anywhere else because you go skiing four times a week, that’s a different story, and I’m sure you are more than happy to pay dearly for your rental house there, but if that is not the case, I encourage you to look a bit deeper for something that suits you better.

My next door neighbor had offers to rent his place for $1,700 (he made a couple of minor upgrades, like flooring etc.), and I know he paid the same as I did for his unit (meaning, his total monthly cost must have been ~$1,450). He ended up selling because he moved out of the country, but he could have made money renting it. True story!

@Ogopogo
Congrats on your 8.~ % Now, back to rent vs. own, here’s an idea (again, not rocket science): grab the $250 or so per month that you will save if you own, and put it on whichever investment you decide. Agreed?

@Calgary Car Guy, post #168:
You’re quite right about older cheap cars, I’ve done the same thing of buying them cheap and keeping them going for a long time. If you’re a half decent do it yourself motor mechanic, it’s the way to go and beats the hell out of leasing.
Worrying about image? My self esteem and enjoyment in life went way up when I spent the money I saved travelling (by air or rail) while my old beater 1993 Plymouth Acclaim stayed at home, or I enjoyed driving it with the canoe or kayak on the roof and camping gear or other recreational gear in the back. Because of the money I saved, I could actually enjoy time between jobs rather than worry about money. That sure beats trying to keep up an image that really no one gives a damn about.

Thanks for the remarks about RSP’s, Garth.
That’s exactly what happened for me – they became income when the job tanked and a business attempt failed. Feels less of a loss when you put it sensibly like that. I was sure happy with the letter from the bank mentioning changes to RSP rules that gave me access to locked-in RSP funds. Whew!

#6,#11 Dorothy’s hubbie did well. In an employers market, ageism has become common. Boomers are seen as expensive, inflexible, and fussy. Or that’s the excuse at least.

Many of the jobs aren’t coming back, even if there is an upturn. And many more are on the way out as your articles observe. The economy is changing as well as Canada’s relationship with the world markets.

Hi Garth,
I’m one of the ones you’ve written about recently who is scared to death of losing what I’ve got. I’m 45. My mother was badly burned in the Eron mortgage scam years back, and after her (our) fiasco I’m doubly nervous. I have a secure but stagnant salary ($50K net), but some decent savings ($450K) due mostly to good luck (buying a house in Van in 2001 and selling it, post-divorce, in 2011). It’s the only real money I will likely ever save, as a single dad. I’m terrified of investing it and losing. On the other hand, I know I’m losing money every day, getting 2% or less. I hear you telling me to invest in preferreds and REITS and I’m getting the message, but… how? Do I hire a guy to invest my money for me, and instruct him where I want him to put it? I’m not interested or knowledgeable enough to do it myself. Is it better to pay a commission to a broker/advisor or a fixed percentage? And how to find the right person? I’ve been sitting on these questions for months, spinning my wheels, and it’s time for me to finally do something. Thanks for your continuing advice.- Stumped

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.